Tuesday, June 24, 2008
U.S. Sugar Getting Out Of Sugar Business
Sugar Selling 187,000 Acres And Company To State For $1.75 Billion
CLEWISTON, FL. -- 187,000 acres of agricultural land is expected to be sold the the State of Florida and South Florida Water Management District by U.S. Sugar Corp. This would vitually wipe out the country's largest sugar cane grower's stock of land south of Lake Okeechobee. Although at a very attractive price to U.S. Sugar of about $9000 per acre.
The largest company and main industry in Hendry county, U.S. Sugar is said to have been negotiating secretly for seven months for the sale. It is unknown what immediate effect of one of the largest land sales in Florida history may bring. U.S. Sugar has 1,700 employees, down from 2,100 in 2006. It's large sugar refinery and mill is located in Clewiston. The sale would take the land off the Hendry county property tax rolls.
Sugar also owns Southern Gardens Citrus in mid-Hendry county and 33,000 acres of citrus groves, and a short line railroad in Clewiston to haul cane and related products. It earns about $400,000,000 yearly from sugar cane production. The sales price of $1.7 billion seems to be a capitalized number based on about a 25% gross revenue stream from the cane.
Governor Crist's office said of the sale Tuesday at a press conference in Palm Beach County, "The proposed agreement between the South Florida Water Management District and the United States Sugar Corporation involves the public purchase of nearly 300 square miles spanning four counties in South Florida a land mass as large as New York City. The District will also take ownership of the company's assets, including 200 miles of railroad, a state-of-the-art sugar mill, sugar refinery and citrus processing plant. Subject to independent appraisals and approval by the District's Governing Board, water managers will invest $1.75 billion in cash and certificates of participation to finance the acquisition."
Chief Executive Robert Buker reportedly estimated the worth of the company's land and other assets, including its sugar mill and refinery, at more than $2.5 billion, so the sale is at about 70% of the company's asset value. It is unclear if the government intends to get into the sugar refinery business or if this may be a scheme where U.S. Sugar can lease back the operation and benefit somehow by the generous sugar subsidy payments made annually to them by the Federal government.
It may take about five years to complete the entire sale in stages, with the water management district paying the bulk of the funds. The district recently announced it was halting work on a 26-square-mile reservoir near South Bay to be part of the Everglades restoration plans in the area. Not including this purchase, State and Federal government has spent over $7 billion on Everglades reconstruction so far.
This is the largest Florida conservation purchase of private land in history. The land is larger the the entire county of Pinellas. U.S. Sugar two years ago, hired a firm headed by Brian Ballard, who was a top campaign adviser to Charlie Crist in 2006.
Rep. Mahoney Responds To Sale
Following the announcement that the State of Florida and South Florida Water Management District have reached a $1.7 billion deal to buy 187,000 acres of U.S. Sugar Corp.'s lands, Congressman Tim Mahoney issued this news statement:
"The State of Florida's decision to have South Florida Water Management purchase 187,000 acres of land owned by U.S. Sugar Corp. holds the promise of taking a major step towards Everglades restoration. Converting this farmland into filter marshes will mean a greater and cleaner flow of water into the Everglades, lessening the need to use the Caloosahatchee and St Lucie Rivers as runoff. It will improve our estuaries and help our coastal communities. Today's decision provides an important complement to Congress' recent passage of the Water Resources Development Act (WRDA), which has finally positioned the Federal Government to live up to its promise to help fund Everglades restoration. Furthermore, Everglades restoration is critical for South Florida's economic development as it will provide fresh water for our region.
Since coming to Congress, one of my top priorities has been to create jobs with a future for rural Florida around Lake Okeechobee. While all Floridians applaud this bold move to restore the Everglades, we must recognize our responsibility to the tens of thousands of people of Hendry, Palm Beach and Glades Counties. A comprehensive economic development plan must be developed immediately to ensure that these communities do not suffer. I call on Governor Crist to lay out his transition plan and I commit to working with the Governor to secure a bright future for the affected families living in some of our most economically challenged communities."